Facebook Stock Forecast 2014 – Do you want to be right, or do you want to be rich?

Facebook Stock Forecast 2014 – Do you want to be right, or do you want to be rich?

Andrew Baxter

Facebook Stock Forecast 2014

Like, Comment

One of the biggest mistakes of our outrageous predictions last year, was Facebook, where we expected the stock to stay in a $27/29 range. We couldn’t have got it any more wrong if we tried, which in itself is quite funny, as you will see below.

So where did the growth come from?

Marketing on Facebook of course. This was something for example, that we as a business had not engaged in. This year we have. It worked well – in fact so well, many of our competitors decided to copy us and do the same. This has led (not just down to us) to a massive swelling in revenue for the social media behemoth.

This is a trend that is likely to continue, certainly into 2014, but may then stall. Why – well looking at some of the financial analysis ratios, FB is on a massive PE multiple ie its price/earnings is very extended. Now PEs aren’t everything but they can give a reasonable feel for where a stock is at versus its peers. There is no doubt that the FB share price has moved ahead strongly, based on the revenue surge seen within the business.

Facebook Stock Forecast 2014 – What is to come?

However, markets are forward looking and perhaps now, are pricing in what is to come. Where that leaves us for next year, of course, is the requirement for more growth to support price movement up. This may prove more challenging. That said, FB is very well placed in the new digital era, where online marketing and particularly social media, play a greater role in information gathering and the sales and marketing process.

What’s more, in such a cutting edge sector and business, there is always going to be something new and exciting in the pipeline. That sort of thing can be a real game changer. As such, a $45/50 trading range is likely to provide good opportunities for covered calls, while a break to the upside, may provide more aggressive trading opportunity.

Facebook Stock Chart 2014

It really boils down to this

Trading and investing is not about predicting what is going to happen, it is responding to what is actually happening and seeking to profit from that. In the case of Facebook, our prediction was wrong – but so what! In our trading activities with our clients, we had a few different trades on the stock, year to date, of which one, the recent closed iron condor delivered a gross 40% plus return. That is more important than anything. And, as the old saying goes, “do you want to be right, or do you want to be rich? After all, they are not the same thing”

Outrageous Market Predictions 2014

Originally from the UK, Andrew has been a market professional for almost 19 years, trading a wide range of global markets and instruments. As a highly regarded industry speaker, he has spoken alongside Sir Richard Branson, Robert Kiyosaki, Anthony Robbins and Tony Blair, empowering many thousands of people, from all over the world, with the skills, techniques and ...

TRADING COURSES

CUSTOMER NOTICE

The information provided by Wealth Magnet Pty Ltd (ABN 52 618 868 830) t/a Australian Investment Education (CAR1255231) to you does not constitute personal financial product advice. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Wealth Magnet recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance).We may at times refer to third parties. Details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. Wealth Magnet has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Wealth Magnet offers investment-related educational products and training to its students in addition to a subscription newsletter, but does not engage in the offering of securities, securities trading, or any other securities-related activities.